- Published on
EQB missed Q2 earnings
- Authors
- Name
- Solo FIRE
EQB reported disappointing earnings yesterday and the stock dropped 7.6%. The management blamed tariff caused uncertainties and economic slow down in Canada. The company has a track record of recovering from downturns such as in 2009 and 2022, so I don’t plan to change my holdings in the company any time soon and will consider buying more if the sell off intensifies.
Here are the key metrics I’m looking for in Q2:
🛑 EPS of $2.31, -18% YoY
🛑 ROE 11.9%, compared to 15%+ expected
🛑Revenue of $316 million, -0.2% YoY
🟢 Book value per share $80.99, +10% YoY
🟢 Net Interest Margin 2.2%, +9bps YoY
🟢 EQ Bank customers increased to 560k, +23% YoY
🛑 Loss provision increased significantly to $30MM, +62% compared to last quarter which is one of the main reasons for EPS decline.
🟢 Increased quarterly dividends 18% YoY to $0.53
🟢 Bought back shares for the first time, totaled 271k or about 0.5% of total shares outstanding
🟢 Significant insider stock purchase at $90 ~ $98 ($30MM purchase by Smith Financial Corp)
Overall, it is good to see the company is still profitable with a good interest margin, continues to grow its customer base and rewarding shareholders.
Stock Valuation
The estimated fair value of EQB is $109.48 using the DCF model, indicating a 13.9% CAGR. Note that net income was used instead of free cash flow for bank stocks. Here are the assumptions:
- Latest TTM Net income CA$395.36 million
- Net income growth rate of 10% (5YR avg of 16.25%)
- 0% Share dilution (5YR AVG 2.67%)
- Future PE of 10 (5YR avg 7.6)
- Discount rate of 10%
You can also see all my past EQB stock analysis using this link.
Holdings Disclosure
- SoloFIRE EQB ownership: 7% of portfolio
- SoloFIRE EQB Average Cost Paid: CA$61.91
- Holding time: 4 years
For on-going changes of my holdings with in-depth analysis, make sure to check out my porfolio updates.
To keep track of my full stock portfolio and get live trade updates, please follow me on Blossom Social
Comments and Questions
Make sure to leave your comments and questions on my original Blossom post
DISCLAIMER: Solofire is not a registered financial advisor. This post contains author's personal opinion only and it should NOT be considered financial advice.